Powell v Aymkone Pty Ltd [2005] NSWSC 1261

New South Wales Supreme Court

CITATION : Powell v Aymkone Pty Ltd [2005] NSWSC 1261

HEARING DATE(S) : 1/12/05

JUDGMENT DATE : 1 December 2005

JURISDICTION : Equity Division

JUDGMENT OF : Young CJ in Eq

DECISION : Appeal from decision of Deputy Registrar dismissed; Plaintiff to provide $30,000 security by 31 March 2006; Proceedings stayed until security provided.

CATCHWORDS : PROCEDURE [666]- Security for costs- Plaintiff resident overseas- Plaintiff impecunious- Whether impecuniosity caused by defendants- Ordinarily no order for security made against plaintiffs who are natural persons- Unfair for defendants to incur expense of enforcing costs order overseas- Poverty alone not basis for order- Must look at strength of plaintiff's case.

Cowell v Taylor (1885) 31 Ch D 34 CASES CITED : Melville v Craig Nowlan & Associates Pty Ltd (2002) 54 NSWLR 82 Morris v Hanley [2000] NSWSC 957

Ernest Harry Powell (P) Aymkone Pty Ltd (D1) PARTIES : John Cleeve Pooley (D2) Bette Marjorie McLean (D3)

FILE NUMBER(S) : SC 5233/04

H A Aizen (P) COUNSEL : N J Owens (D1 & 2)

Grundy Maitland & Co (Melbourne) (P) SOLICITORS : Foulsham & Geddes (D1 & 2)

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Thursday 1 December 2005

5233/04 – POWELL v AYMKONE PTY LTD JUDGMENT 1 HIS HONOUR: This is an appeal from Deputy Registrar Walton, as she then was, who on 20 June 2005, on the motion of the defendants, made an order that the plaintiff within fourteen days give security for costs in the sum of $30,000 and that proceedings be stayed in the meantime. 2 She also intended to make an order that the claim be dismissed with costs, without further order, if it was not given within a time specified, but it is hard to see where she actually specified the time. 3 The appellant says that on the authorities, on the material before the learned Deputy Registrar, and on the further material contained in the affidavit of Mr Maitland sworn on 28 November 2005, which was read before me, that this is not a case where it is appropriate to order that security for costs be given. 4 The plaintiff lives in California. He says that he made a number of investments in Australia per the medium of a Mr Camm, who is now bankrupt. The plaintiff sued Mr Camm in the Supreme Court of Queensland and obtained a judgment. The action appears to be on the same facts as are alleged in the present proceedings. However, in the present proceedings the plaintiff sues the first and second defendants for breach of trust and under the principle in Barnes v Addy with respect to his investments, alleging that Camm was somehow or other an agent of one or other of the defendants when he conducted his nefarious operations. 5 The statement of claim is a very verbose document and I think there is little contest that before this case is set down for hearing, if that ever occurs, it will need to be reviewed and refined. That, however, is beside the point today. 6 The plaintiff says that he has no assets and that the reason why he has no assets is because of the conduct of the defendants in this case. The defendants, however, say two things; first of all, it was not their conduct that may have impoverished the plaintiff, rather it was the conduct of Camm, and they deny that they have the vicarious or equitable liability for Camm's conduct. Secondly, that if one analyses the evidence given by the plaintiff, as counsel for the defendants has done in paras 58 and following of his written submissions, one can see that a considerable portion of the moneys of which the plaintiff says he was deprived, had nothing to do with the activities of the defendants or Camm. 7 As far as I can see there is no answer to those allegations and so I would affirm the decision that the Registrar made on the evidence before her; that the court is not satisfied that the impecuniosity of the plaintiff had been caused by the defendants. 8 Once one reaches this situation most of the case for the appellant falls away. However, the appellant says that there is a difference between an individual who lives overseas and one who lives interstate. Generally speaking, the authorities show, as was the submission, and it is certainly correct, that in a case of an individual plaintiff, as opposed to a corporate plaintiff, the court does not ordinarily make an order for security for costs. However, there was provision in the rules that the court might make an order for security for costs where the plaintiff lived outside New South Wales. That rule had earlier been modified, or alternatively not applied for people who live in Australia. The reason for that is because s 117 of the Australian Constitution forbids discrimination between residents of different States. 9 The basal principle remains that it is unfair to a defendant, where the plaintiff is outside the jurisdiction, to have to go to the extra expense of executing any judgment for costs. The fact that the plaintiff lives in California means that s 117 does not protect him, so the basal rule applies. 10 The evidence as to the costs of registering or enforcing an order for costs made in this Court in California is that because California is not covered by the convention it is necessary to commence a separate action and to go through a second process. There is some provision for the defendant to consent to judgment without a formal claim being made, and the defendant in the instant case has agreed to give such consent. However, that cannot formally be done until there is a sum certain for the judgment, and even if it could be done there is no guarantee that there could be any benefit obtained if there was execution on the Californian judgment. 11 The matter is in the discretion of the court and there are a large number of authorities to guide the court as to how it exercises its discretion, but they are only guidelines, each case must be considered on its separate facts. 12 One of the matters which guide the court in the exercise of its discretion is that it should not stultify litigation by shutting out valid claims merely on the ground of the poverty of the plaintiff and a fortiori where there appears to be some dishonesty, breach of trust or other public interest involved in the case. 13 As I said in Morris v Hanley [2000] NSWSC 957 and repeated when a member of the Court of Appeal in Melville v Craig Nowlan and Associates Pty Ltd (2002) 54 NSWLR 82, the rule about poverty, although often cited in the form "the general rule is that poverty is no bar for the litigant" (see Bowen LJ in Cowell v Taylor (1885) 31 Ch D 34 at 38) is really a little more restrictive. When one looks through the history of it, and the cases on it, one must always take into account, together with the alleged poverty of the plaintiff, the assessment (such as one can make at an early stage of the proceedings) of the strength of the plaintiff's case. 14 It appears on the material before me that the plaintiff is quite justified in complaining about Mr Camm's conduct. That has already been confirmed by the Queensland Supreme Court and the document to which Mr Maitland has gained access from the trustee in bankruptcy of Mr Camm. The plaintiff says, however, that Mr Pooley, the second defendant, and his company, were privy to Mr Camm's frauds. This is certainly not quite so clear and indeed in order to show that, Mr Powell, the plaintiff, may have to recant some of the sworn evidence he already gave in the Supreme Court of Queensland. 15 Thus, in my view, there are significant difficulties in the way of the plaintiff succeeding in the present litigation but just how great those difficulties are cannot be assessed at this stage. It is not, however, as simple as Mr Aizen of counsel, says for the plaintiff, that the plaintiff has a strong case against these current defendants. 16 Accordingly, it seems to me that looking at the relevant factors, the learned Registrar was right in the decision she reached. The order for $30,000 will have no relation at all to the total costs of the suit which will probably run into hundreds of thousands of dollars, if it runs its full course, but the evidence from Baker and McKenzie, which I prefer to the evidence of the American lawyer, is that $39,000 may well be the costs of registering any order for costs in California. Accordingly, I dismiss the appeal with costs. 17 The order of the Registrar is varied so that the proceedings are stayed until the security is provided. The security may be provided by cash deposit, or by a bond of a recognised Australian financial institution, and if it is not provided by 31 March 2006 then the proceedings are dismissed with costs. If the security is provided, then the matter and/or associated motions can be listed before the Registrar on 4 May 2006.